Tag Archive for: corruption

Business as Mission: An Expression of Biblical Integrity

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by Mike Baer

The word “integrity” has been bandied about so much over the last decade or so that it has practically become meaningless. Politicians are described in their self-serving advertisements as men or women of “integrity.” We like the word. It’s right up there with “tolerant”—another empty term. In fact, who could argue with someone who was tolerant and had integrity. He or she would be a postmodern super hero.

Unfortunately, we don’t think about words much any more. We don’t dwell on what they mean. As a result, we lose the richness and power of a great concept. So, in this article, I want to spend a few moments unpacking two dimensions of integrity, especially in the context of Business as Mission.

Integrity and Ethics

When I first began teaching business in the Former Soviet Union twenty years ago, the first hurdle I had to overcome was establishing that business was legitimate in the first place. Most people viewed business as inherently corrupt and dishonest. Today’s America has very much the same opinion. And why not? We hear constant news flashes of another scandal in Apple’s China factory or fraud in CitiGroup’s financial products or theft on Wall Street, or…ad nauseum.  It is erroneous to confuse business with the business person. The person is corrupt but business is not. Nevertheless, few think that deeply and so they condemn all things business as dark, greedy and devilish.

Read more

Turbocam India: A Stand Against Corruption

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The Beginnings

Like many small business stories, the story of Turbocam India involves the spark of opportunity, mixed in with a great deal of perseverance and one or two major breakthroughs that have set the course of the company. But perhaps the most important ingredient of all has been a firmly held belief from its inception that Turbocam was to be a ‘Kingdom company’, existing as a business for the purpose of honouring God.

Turbocam International was founded by Indian Marian Noronha in New Hampshire, USA in 1985. Turbocam’s core business revolves around manufacturing specialised machine parts for turbines and turbochargers, using sophisticated software to machine very high-precision, delicately balanced parts. Right from its earliest days Marian envisioned the company would be used in the service of God. The ideas of creating jobs and generating wealth, supporting Christian service and manufacturing high quality turbo machinery products have all been integral to the mission of the company from the beginning.

An Opportunity

One day in 1984, Marian and his American wife, Suzie, were walking the streets of Bombay and heard singing. They liked what they heard and went in to what turned out to be a small church led by British-born Duncan Watkinson and his Indian wife, Vasanti. Having cross-cultural marriage in common, the couples struck up an immediate friendship that would later lead to business partnership.

In May 1989, Marian invited Duncan to consider using his background in engineering to take on the establishment of Turbocam in India. Marian was looking for an opportunity to expand Turbocam operations outside the USA and into his native India. Coupled with this was a mutual desire to provide greater stability for Duncan and Vasanti’s work amongst churches and helping the poor.

The invitation was accepted and Turbocam India Pvt. Ltd. was established later that year. As Managing Director, Duncan’s role has been to oversee the company operations from his office, originally in Bombay and for the last 13 years in Bangalore. The manufacturing plant, located in Goa, has been from the earliest days overseen by trusted General Manager, Savio Carvalho. Read more

Six BAM Views from the Continent of Africa

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We asked people working on the front-lines of BAM in different parts of Africa to share some of their experiences and perspectives. They see business as a powerful means to share the message of the Gospel in the marketplace, deepen the impact of Jesus’ teachings on society, tackle evils such as poverty and corruption and mobilise the next generation of African Christians to transform their own nations. Here are six BAM views from Africa:

 

BAM is crucial in South Africa as a key to two major challenges: discipleship and economic empowerment. South Africa is said to have a high percentage of Christians, however, like many other parts of the world, sin is a key challenge. Corruption, sexual immorality, crime and other evils are on the rise, indicating that Christianity has not been making the kind of impact on society as it should. Business as mission could therefore provide an avenue for regular discipleship in the marketplace, as believers model Godly character and leadership.

South Africa also has a high percentage of poor people, although it is Africa’s most advanced economy. BAM – especially ‘BAM at the base of the pyramid’ – may be the key to large scale sustainable economic empowerment, particularly through the establishment of SME sized companies in rural areas.

Henry Gwani is originally from Nigeria, now working in BAM in South Africa Read more

A BAM Practitioner’s Thoughts on Taxes

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Once a month, our panel of mentors answer your practical business questions. Send us your questions!

 

Dear BAM Mentor,

What are some guidelines you could pass on from your practical experience of paying taxes? I am in a challenging environment for business, and while I don’t want to evade tax, I do want to minimise company taxes to give my business the best chance of survival.

~ Taxed

Dear Taxed,

In short, it is critically important that BAM companies do their tax and legal work in a “world class manner.”

What does this look like? You find and retain good tax people who will keep you within the laws while also minimizing taxes. Plan ahead and stay current.

Be wise as serpents and innocent as doves – Matt 10:16

The mature…have their powers of discernment trained by constant practice to distinguish good from evil – Hebrews 5:14, ESV

Some Background

Since 1990, our BAM-focused holding company has had partial or full ownership in over 25 companies with another 20+ companies being “management-supported” by us, with total workforce around 5,000. These legal entities have been in eight different countries, with five of those countries among the least reached of the world – China and four Islamic countries. We have holding companies in three other countries primarily for tax purposes: Hong Kong, USA and Mauritius

We have had situations where we were trail-blazing operating a foreign-owned company in a place. We were the very first foreign company registered in a certain Central Asian country when it was still part of the Soviet Union. We were the second foreign company registered in that same country, under the new system, when it when it became independent. Read more

Navigating Legal and Tax Challenges in Southeast Asia

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We interviewed the founders of a group of retail companies that started in 1999 and now operate in three countries across Southeast Asia. We asked them what their greatest legal and tax challenges have been and how they have overcome them.

One of our first and biggest challenges was figuring out how to set up and operate our businesses in Vietnam. Although the law has changed since we first started out, at the time it wasn’t possible for a retail business to be owned by a foreigner. We had a production company there which we fully owned, but for the retail side we had to be creative. We followed a well-used route at the time that involved setting up an agreement with a trusted Vietnamese partner to establish the company, with written contracts to back it up. Although this route was legal, it wasn’t clear cut and wasn’t always easy to know how to navigate the situation.

Each time we have registered a new company in one of the countries we’ve hired a local law firm or business consulting firm to help us go through the business registration process. This has been essential because where we operate, this is not something you want to do on your own. We use a lawyer and we check with consultants locally about the process. We got our Vietnam registration completed in six months, whereas others have taken years. Getting that expert input is essential – if you don’t have everything right, it can really come back to bite you.

In Vietnam it is difficult to process anything without paying extra ‘fees’. We don’t pay bribes (i.e. offering money to receive a service we are not entitled to), but we do occasionally get extorted for money (i.e. being forced to pay extra for a service we are entitled to). Although we do try and resist being extorted, it does happen from time to time. Read more

6 Resources for BAMers Looking for Legal or Tax Advice

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Here are six useful resources for BAM practitioners seeking legal or tax advice.

Tax and Legal Professionals

Professional tax accountants or lawyers can be necessary for some legal processes and specialist advice. Getting good advice and guidance through important business processes can save weeks or months of work. Some legal firms locally may specialise in business registration services. Likewise for accountancy firms that specialise in tax requirements for foreign owned businesses, for instance. Ask in your network for recommendations for reliable accountants or lawyers. See our ‘BAM Guide to Finding Good Legal and Tax Advice’ for further recommendations.

Government Business Advice

Many governments provide local business advice bureaus or guides to doing business in their country. These bureaus may offer handbooks or guides, copies of legal code for businesses, generic forms or standard documents for adaptation, and business advisors. Look up what may be available to you in-country. Some BAMers have reported that approaching local government officials for advice has resulting in them building friendly working relationships with local government departments. Read more

How to Approach Company Taxes in Challenging Situations

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Once a month, our panel of mentors answer your practical business questions. Send us your questions!

 

Dear BAM Mentor,

What are some guidelines you could pass on from your practical experience of paying taxes? I am in a challenging environment for business, and while I don’t want to evade tax, I do want to minimise company taxes to give my business the best chance of survival.

~ Taxed

Dear Taxed,

Jesus was very clear about giving Caesar what is Caesar’s and God what is God’s. He also once told his disciples to go fishing and to pay the temple tax with the coin they’d find in the fish’s mouth. Jesus lived and worked in a pretty tough context where neither Roman nor Jewish tax officials were known for reasonableness, but he taught us to pay taxes and to respect governmental authority. So the core principles are straight forward. It’s just the practical application that hurts!

Tax evasion is illegal, but in some settings is virtually inevitable. Tax avoidance can be either clever or immoral based on circumstances. Much of the world is angry with large corporations which legally avoid taxes by moving their headquarters to tax havens and while making massive profits pay little to the countries in which they really operate. It’s legal, yes, but it’s not very honourable behaviour. On the other hand, paying unneeded taxes is simply wasteful. Read more

The BAM Guide to Finding Good Legal and Tax Advice

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Following on from our series on BAM in Hard Places, we are delving deeper into how to deal with legal and tax issues, especially in challenging or cross-cultural situations.

It is absolutely critical to get the best advice for legal and tax issues. It’s easy to get caught up in the busyness of business life and push issues of legal compliance away. However, neglect these areas at your own peril, they can bring your business down.

Why You Might Need a Lawyer or Accountant

There can be many areas of legal compliance that will require your business to seek advice from a lawyer. Different lawyers tend to specialise in different areas, so if possible find a specialist in the area of the law relevant to your need. For tax issues, you will either be engaging a tax accountant or specialist tax lawyer.

Here are some areas of doing business that may require legal advice:

Registering a Business
Advice on requirements for properly structuring and incorporating a new business. You may need a lawyer to guide through the process of registration, such as helping to put together the required documents, obtaining licenses or talking to government departments on your behalf.

Annual Reporting
Help with fulfilling obligations that companies have to submit accounts for tax purposes, or for annual company registration or reporting in the legal jurisdiction. Read more

Day to Day Life in Hostile Places: Doing Business in Central Asia

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The challenges to doing business here are many. The market is small and corruption is massive. There is a deficit of qualified professionals in the employee pool. This means that you need to fully train whoever you hire, knowing that when they have marketable skills, they will be seeking to emigrate to a country for a “better life”.

Inflation is another significant risk factor for business, as well as sudden bouts of devaluation which can be disastrous when supplies are purchased in dollars but customers are paying in local currency. Corruption and lawlessness are rampant in government institutions and there is an underdeveloped legal framework for doing business. We openly declare our position against corruption and this is a plus and a minus. We have no sense of protection from the government here, and there is constant pressure. One of the most threatening developments has been the more recent rise here in Islamic radicalism.

When we published the book of Proverbs and began to openly distribute it we raised the wrath of certain legislators in the parliament here. They vowed to shut us down and began sending an endless barrage of inspectors from every possible government department, all instructed to find something that could put us out of business. We faced corruption that brought us to the brink of being shut down. Our refusal to pay bribes resulted in lawsuits, investigations and audits. In the end, however, most inspectors went away with a true respect for how we run our business. The auditor sent to “shut us down” ended up so impressed at our dealings that she came to the faith. Read more

Day to Day Life in Hostile Places: Doing Business in North Africa

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How do you do business in a country that your home country says it is illegal to do business in? Forget about export markets. Forget about connections to the international banking system for personal or business funds. Forget about visiting the ATM. You need to carry as much cash in with you every time you come and then stick in a safe in the corner of your bedroom because you cannot have a bank account in the country.

The bureaucracy and corruption were just the tip of the iceberg of doing business where we lived in North Africa. War and instability, currency fluctuations, international sanctions and constant anti-Western sentiment from the country’s government were just some of the things we contended with day to day. Even the weather could be hostile, with highs of 45°c (113°f), along with sandstorms and power cuts!

Although war was almost constant in different areas of the country, it rarely impacted daily life in the capital. We often told our family that even though the country had been through decades of civil war, the rebels had only attacked the capital once and that was 30 years ago. That was until they attacked it while we were there! The situation returned to normal after a week, but it was hectic. The city shut down for that week while battles went street to street.

On another occasion, we had an outreach team ambushed with grenades and AK-47’s while doing ministry in a remote district that we thought was safe. A number of team were killed and wounded. We still don’t know who was behind the attack. Read more

After the Tsunami: Business on the Edge

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Little did James know just how strategically God had placed him fourteen years prior to the adversity that rocked multiple countries and millions of people when the 2004 tsunami hit Asia. As the ocean bulldozed its way through the coastline, sparing nothing in its path, so came a flood of both urgent and long-term needs. The physical destruction was almost incomprehensible, with hundreds of thousands of homes leveled and those that weren’t completely destroyed sustaining major water damage.

The area James lived in had long experienced government versus rebel conflict. Trust levels were at a low between people groups. Most things had ground to a complete halt as a result of years of unrest. The infrastructure was almost nonexistent, and what little infrastructure was there was almost completely dysfunctional. The civil unrest had already led to massive financial devastation. The additional destruction of the tsunami made for a completely corrupt situation where everyone grabbed for whatever money they could get their hands on.

For Such a Time as This

After the tsunami’s destruction of homes, multitudes lived in refugee camps which were a hotbed for the advancement of political unrest or conflict. The circumstances were ripe for anything but a successful BAM venture! Except that James and his wife and team knew they were called ‘for such a time as this’ and the Holy Spirit was leading them. James also had some ‘street smarts’ when it came to working in his location, which helped him move farther, faster. They hadn’t seen it coming, but along with the devastation of the tsunami came opportunities to start businesses that could help rebuild. Read more

Guidelines for Cross-Cultural Business Ethics

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By Larry Sharp

This article is designed to help with decision making for business owners working cross-culturally in developing countries. It recognises that there are few absolute standards which apply to all contexts all the time and thus hopefully these guidelines will assist business owners in making tough decisions on matters related to ethics, corruption, morality, bribery and similar themes.

Some would like to believe that the Bible gives a single definitive perspective for all situations. While this is not true, the Bible does give us principles for decision making, thus in preparing for decisions it is important to understand Biblical absolutes in the light of:

  • Biblical culture
  • Our own culture of socialization
  • Our host culture of doing business

Ethics may be defined as the moral philosophy of knowing the difference between what is right and wrong and acting accordingly. It includes a moral duty and obligation to do good, a statement which seems straightforward but which is complex in light of diverse cultures. Ethics has its root in the Greek word “ethos” which means character; therefore an ethical framework is a systematic set of concepts which provides guidelines for correct behaviour that demonstrates ideal individual and corporate character.

It is important that we treat these guidelines as just that – “guidelines” that are a means to guide our customization in the application of God’s principles to contextual situations in our modern world. Read more

Four Personal Experiences of BAM in Hard Places

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The BAM Global Think Tank Report on BAM in Hostile Environments shares numerous personal stories and cases from BAM companies in hard places. Here are four brief experiences:

Boat Building in East Asia

In 2009 Josh was living in East Asia and had an opportunity to buy a boat building company there. He saw the opportunity to own a company in an unreached area and use it for ‘triple bottom line’ impact: to be profitable and sustainable, to create jobs, to live out ‘Jesus’ and to make disciples of Jesus among the Muslim and Hindu population. Josh was a fully qualified architect; he had 25 years of boating experience together with experience of teaching design and construction technology; he had lived in country for five years and spoke the language fluently; he had made several disciples of Jesus on other islands. While Josh brought considerable assets to the table, he did not have a business background, he had no money and he had not rubbed shoulders with the cutthroat business world of the country. While the company for sale had proven profitable, there were several hostile factors: the previous owner had not paid taxes and had a system for smuggling profits out of the country; the owner had some debts and potentially serious liabilities against the company; the country’s tax and other typical business laws were not obvious or easily known and Josh knew of no place in country where he could go for honest help; the location was isolated for a family with three children. Read more

BAM in Hard Places: The Challenge of Business in Hostile Environments

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BAM ventures are one of the innovative ways that we are called to do mission in the two-thirds of the world’s countries that are highly corrupt and require risk management skills, sound judgement, discernment, strong leadership and spiritual maturity.

Launching and/or managing a business as mission company within a hostile environment encompasses a set of risks that are unique and varied, in contrast to the more familiar kinds of risk that most businesses encounter. By anticipating, recognising and managing these risks, a BAM team is more likely to achieve business sustainability and spiritual fruitfulness. 

The Risks That Face Us  

We are conceiving risk as falling broadly into three areas:

1. Business

2. Mission

3. Personal (including family)

Risks in these three areas can overlap and vary in intensity from situation to situation.

Understanding and managing risk in any environment is usually challenging for most business owners, but navigating unfamiliar risks within a hostile environment is part of the learning process that successful BAM entrepreneurs must navigate. Successful management of these risks requires the entrepreneur to exercise a high degree of discernment and good judgment.  Read more

Corruption Cheat Sheet

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BAM Cheat Sheet Corruption

Click image to open PDF, save or print.

 With thanks to Larry Sharp and Dwight Nordstrom.

25 Years of Business in China: Interview on Tackling Corruption

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Interview with Dwight Nordstrom

Dwight, you have been in business for 25 years in China, and not just any business, you’ve been involved in manufacturing in big industries, like chemicals and telecommunications, regularly importing supplies and exporting products. How big has the issue of corruption been?

Well let me just start by saying: This is real! This is not hypothetical stuff, it’s a big issue for us. I would say I have to deal with about 25 cases a year of substantial corruption-related situations. To put that in perspective with other common issues faced by businesses, in last 20 years, across our operations of about 5000 people in Asia, I have had zero illegal drug issues, a couple of alcohol related issues, I have had two sexual harassment issues of a serious nature to deal with, but the major issue by a long way is corruption which I have had to deal with at least twice a month. Corruption is a big issue.

Can you give us an example where you’ve had to deal with someone trying to bribe you?

We’ve had situations where we’ve lost business over refusing to pay a bribe. We had a speciality chemical and the representative in a wholly-owned German company asked for a 5% kickback, with 1% going into a personal account. That was a million dollar plus account per year and I don’t even know now six years later if we’ve ever recovered the value of the account. Read more

Doing Business in Kazakhstan: Economic Implications of Worldview

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by Kevin White

Kazakhstan is one of the top ten fastest growing economies in the world. This multicultural developing nation is home to 140 various ethnicities and 17 religious groups. The capital city Astana is slated to host the Expo 2017. Kazakhstan’s ambitious 2050 plan is to become one of the top thirty most developed economies in the world. In this vein, Kazakhstan is engaging in unprecedented efforts to attract foreign investment. Recent legislation is offering investors 30% government subsidies on their investment and up to ten years tax free. This offer has been marketed to Western audiences through canny ad campaigns in popular media venues such as Euronews.

Yet in spite of these sincere efforts, corruption behind the scenes is still all too prevalent. A spokesman for the Dutch embassy, who wished to remain anonymous, stated that recently a Dutch company took Kazakhstan up on its attractive offer. However, shortly after completion of their new facility, Kazakhstan “inspectors” found a piece of machinery in violation to some obscure code. As a result the Dutch company had their investment subsidy rescinded and were fined 40% of their investment for a penalty. Similarly, a German businessman stated that German companies are still hesitant to invest substantially because of the routine problems of corruption and bureaucracy.    Read more

Lessons from the Edge: Dealing with Bribery in China

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Insights from a BAM Practitioner

Dwight Nordstrom is a veteran of doing business in Asia for almost 30 years. He is on a continuing journey of learning how to deal with bribery and corruption as he leads Pacific Resources International, to expand manufacturing operations in China.

Don’t make blanket statements about bribery and corruption. 
This issue is simple, yet complex! It is good practice to talk about individual cases versus making unilateral statements. Brainstorm with others. Ask, What does this mean in this context?  Is there a different way we could do this? Is there a way we could still win this business? 

Have a zero tolerance approach in your top leadership. 
Within your own company leaders – especially in your purchasing and financial operations – you have got to have a zero tolerance for bribes. Have good frameworks in place to train, implement and evaluate that zero tolerance approach.

Be incredibly selective about what industry and type of business you get into. 
There are a lot of businesses I wouldn’t touch because it is such a corrupt industry. Select the type of industry very carefully since that will determine how much corruption you will face. Build your competency in an industry that is less corrupt before taking on business in more corrupt sectors.

 

The Challenge of Corruption

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Corruption is defined as the misuse of power by someone to whom it has been entrusted, for their own private gain. The most common form of corruption is bribery, which is defined as the giving or receiving of money, a gift or other advantage as an inducement to do something that is dishonest, illegal or a breach of trust in the course of doing business.1

Corruption is one of the biggest issues that business people face globally today, and is a highly relevant topic for business as mission practitioners – Joseph Vijayam, Director of Olive Tech, a BAM company in India and the USA.

Bribery and corruption not only represent a significant risk for your company, but keep millions in poverty.

“[Corruption] constitutes a major obstacle to reducing poverty, inequality and infant mortality in emerging economies” according to Daniel Kaufmann, the World Bank Institute’s director for Governance.2 According to World Bank Institute (WBI) research, more than $1 trillion dollars (US$1,000 billion) is paid in bribes each year. This US$1 trillion figure is an estimate of actual bribes paid worldwide in both rich and developing countries and does not include embezzlement of public funds or theft of public assets. WBI research also shows that countries that tackle corruption and improve their rule of law can increase their national incomes by as much as four times in the long term, and child mortality can fall as much as 75 percent.2

Christian Aid predicted in 2008 that illegal, trade-related tax evasion alone will be responsible for some 5.6 million deaths of young children in the developing world between 2000 and 2015. That is almost 1,000 a day.3 However, corruption is not just happening in the developing world. Read more

Ask a BAM Mentor: Dealing with Corruption

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Twice a month, our panel of mentors answer your practical business questions. Send us your questions!

Dear BAM Mentor,

My customs broker tells me I have to give a gift to the customs officials to get our materials out of customs. He said it’s standard, no big deal. I asked the pastor at our local church and he said it would be terrible to pay a bribe like that – it’s illegal and gives a very bad lesson to others.  I’m new in the business and to importing here, and our business may fold if I can’t get this out soon. Is this a time to die for my principles or should I go with “when in Rome, do as the Romans do”?

~ Contemplating Corruption

Dear Contemplating Corruption,

Over which principle are you considering ‘dying’?  Is it God’s call to honesty? Or is it obedience to the local church and, if so, is the church correct?  I suspect that untangling the issues will help.

It sounds like you live in one of the many countries where written law differs from applied law. That’s how speed laws work in the UK, incidentally – they are applied, but not strictly. Most western country laws against foreign bribery make an explicit exclusion for “expediting payment”, which morally can be classified as extortion by the official who is withholding your legal rights until he or she gets their bribe. That’s fundamentally different from bribing an official to get something for which you don’t have the right. Paying an extortionist is generally a bad idea, but it’s on a different moral level than bribery. I wouldn’t die over an extortionists demand. Read more

Tag Archive for: corruption